John R Williams Director, Navy SBIR & STTR Navy SBIR/STTR Overview Small Business Innovation Research (SBIR) Small Business Technology Transfer (STTR)

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The SBIR Process PHASE I Feasibility Research PHASE III Product Development for Gov’t or Commercial Market Private Sector Investment Tax Revenue Federal Investment About $2.3B in FY10 PHASE II Research towards Prototype Social and Government Needs $1M $150K R&D Investment Non-SBIR Government Investment $148 billion

The Early Stage “Valley of Death” Pre-SeedSeed/Start-UpEarlyLater Founders, Friends, Family & Fools SBIR AWARDS /Angel Investors/ Angel Groups Venture Funds * $25,000$100,000 $1 to 2 million $5 million Funding Gap VALLEY OF DEATH Adapted from: Richard Bendis and Ethan Blyer, “Creating a National Innovation Framework, Science Progress, 2009 * Average Venture Investment is $8.3 million

Why would a Small Business Want to Participate in the SBIR/STTR Program ? Largest source early stage R&D funds for Small Business – Fed wide ~$2.1B Navy ~$265M No dilution of ownership; owners retain control and retains data rights for 4 years or more (5 for DoD) Follow-on awards are contracted non-competitively Strong commercialization support No repayment is required –Government recoupment is through the tax system Certification effect draws in additional investment –Signal to private investors of technological validity and commercial promise of the innovation

SBIR’s Advantages for Government A low-cost technological probe –Enables government to explore more cheaply ideas that may hold promise –Identifies dead-ends before substantial investments are made Quick reaction capability –Solicitations topics can respond urgent national needs and follow on funding can be implemented quickly Diversifies the Government Supplier-base –Brings in competition, low-cost solutions, new approaches to address mission needs

7 Over Two Decades of Consolidation: What was over 100 “name plate” primes in the 80s is now five firms… Sources: DM&A, Washington Technology, Company reports, and CSIS Analysis.Federal Services Defense HardwareCommercial IT Raytheon REMCO SA Hughes Electronics BET PLC's Rediffusion Simulation General Dynamics Missile Division Magnavox STC PLC–Navigation Systems TRW-LSI Products Inc. Corporate Jets E-Systems HRB Systems Inc. Chrysler Techn. Airborne Texas Instr. El. Defense Raytheon Allied Signal, Inc. (Comm Systems) Aerospace Group (Australia) Boeing Australia Ltd. JPS Communications, Inc. Solipsys Honeywell International Corp. (Australia) Photon Research Associates, Inc. Boeing Boeing Co. Rockwell Litton Precision Gear McDonnell Douglas Hughes Electronics Satellite SVS, Inc. Autometric, Inc. Continental Graphics Corp. Jeppesen Sanderson, Inc. Hawker de Havilland Ltd. (Australia) Conquest, Inc. Frontier Systems, Inc. General Dynamics General Dynamics Bath Iron Works Lockheed Martin Defense Sys, Armament Sys Lucent Advanced Technology Systems Computing Devices International, Inc NASSCO Holdings, Inc. Gulfstream Aerospace GTE Government Systems Corp. Units Santa Barbara Primex Technologies Galaxy Aerospace Motorola Integrated Info Sys GM Defense SIGNAL Corp. Trident Data Systems MRJ Technology Solutions Pacific-Sierra Research Corp. DatumCom Corp. Veridian Corp. Digital System Resources, Inc. ERIM International, Inc. Spectrum Astro, Inc. Tripoint Global Communications, Inc. Engineering Technology, Inc. Newport News Shipbuilding TRW BDM International Inc. Lockheed Martin Martin Marietta Corp. Lockheed Space Systems Division (General Dynamics) GE Aerospace Loral Corp. IBM Federal Systems Unisys Corp Defense Systems Honeywell-Electro-Optics Fairchild Weston Systems Inc. Ford Aerospace Librascope LTV–Missile Business General Dynamics–Ft. Worth MEL COMSAT Corp. OAO Corp. Affiliated Computer Services, Inc. (ACS) The SYTEX Group, Inc. STASYS Ltd. (UK) Sippican Holdings, Inc.

Small Business Winners Helps Us Find the New Players Small hi-tech firms from across the country Many are firms 0 to 3 years old and SBIR funding first major source of funds

Two main goals of Navy SBIR/STTR Program: Use small business to develop innovative R&D that addresses a Navy need Commercialize (Phase III) that technology into a Navy platform or weapons system

Navy by the Numbers

Navy SBIR Organization Program Administered by the Office of Naval Research Program Participants Naval Sea Systems Command (NAVSEA): Warfare Centers, PEO’s and Program Managers Naval Air Systems Command (NAVAIR): Warfare Centers, PEO’s and Program Managers Office of Naval Research (ONR): Science & Technology Directorates and Naval Research Laboratory Space & Warfare Sys. Command (SPAWAR): Warfare Centers, PEO’s and Program Managers Marine Corps Systems Command (MARCOR): Direct Reporting Program Managers Naval Supply Systems Command (NAVSUP) Naval Facilities Systems Command (NAVFAC)

Navy follows TECHNOLOGY PULL APPROACH Over 80% of Navy Topics are selected by PEO/PM/FNC office and address one of their specific needs -- not just “sponsored by” Topics and awards based on their R&D priorities and SBIR funding allocation. The PEO gets back 90% of their tax Many contracts awarded/monitored by lab employees with Acquisition Office POC involved

Year 6 CONTRACT TYPE - Non-SBIR $ FFP Contract CPFF or FFP Contract CPFF or FFP Contract Any TRL  76-9 NAVY SBIR/STTR Award Structure and Phase II.5 — Transition Strategies Phase III variable Enhancement* ~ 12 mo. $≤ 750k SBIR Cont. Dev. 12 – 18 mo. TP (Transition Project)* ≤ 2 yr. $≤ 750k SBIR TTA Required Phase 1 6 mo. Phase mo. TTA Required $80k $70k Base up to $750K Some Require TTP $≤ 1.50M SBIR NTE $150KNTE $1M NTE $1.5M NTE $2.65M Opt. ~ 9 mo. $≤ 250k SBIR Year 1Year 2Year 3Year 4Year 5 Feasibility Technology Development and Prototype Demo. ACTIVITY - Prototype Testing & Evaluation Technology Demonstration & Validation SBIR FUNDS - Option 6 mo.

Navy SBIR/STTR Website

Tips for Succeeding w/Navy Just Getting Started? Research topics consistent with your business strategy. Current and past solicitations identify Navy technology needs. Know Navy structure. Submit proposals for solicitations your company can solve. Prepare to be innovative. Already have a Phase I? Know your target platform/system for insertion. Build strategic partnerships (Primes, Universities, Acquisition Managers, Program Managers). Plan commercialization path early with TPOC.

Collaboration during the Solicitation Period Topic Authors Q&A direct during pre-release Q&A electronic bulletin board (SITIS) from pre-release to close Administrative Help Desk Telephone 8am-5pm hours a day at

How To Search Current SBIR/STTR Solicitations Federal Wide Resources DoD Only Good for getting list of all topic titles but ZYN is better as topic search tool

Search Past Awards

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